Sure you can. I own both a 720p and 1080p 32" set and a 40" 1080p set. When feeding the 32" sets with 1080p material, you can definitely tell a difference.
I sure couldn't tell a difference in the store when I was buying my 40" about 2 years ago. And I watched the demo at different distances from the TV's, and I didn't see a difference between 720p at 37" or lower, but 40"+, yeah, there was a major difference.